Time and time again we’ve seen industry pioneers return to the game after a long absence, recovering from burning the natural and organic candle seven days a week. Add John Paino co-founder of Nasoya Foods to the growing list.
As one of the early soyfood revolutionaries, Paino negotiated the sale of Nasoya in 1990 to the Asian soy foods powerhouse Vitasoy. After the sale, Paino remained with the company for three years before taking time off and then a successful stint selling Cell Tech blue green algae as a multi-level distributor.
Four years ago Paino started his new business co-packing soy ricotta and dairy free ravioli to manufacturers whose names everyone would know.
At Expo East this past September, Paino Foods launched it’s NatureNaise line of vegan mayonnaise. NatureNaise is packed in 16 ounce jars and sold in the refrigerator with a MSRP is $5.69. In addition to the original, the company also makes NatureNaise Omega 3,made with organic flax oil. Paino also sells a line of salsa called Number 9, which got their name because they’re made with nine vegetables (such as onions, garlic, fire roasted red peppers, scallions).
Here at NBN we often laugh about a comment a colleague made while looking for a new marketing job. “If I have to make a business plan for another organic salsa, I think I’ll kill myself.”
No doubt Paino has the opposite point of view. With this in mind we decided to ask him some questions about the changes in the industry.
NBN: What’s the biggest change since the days Nasoya was started?
JP: Back then, health food stores couldn’t wait to bring new and alternative products into their stores. They needed more natural food items to fill their shelves. It was a manufacturer’s dream. We came out with Tofu and everyone wanted it. We came out with eggless egg salad, salad dressings from Soy, vegi dips etc, and stores just picked them up. Distributors competed to get your product out there first. Today there is less competition on that level, so the distributors can dictate terms. There are less independent natural food stores, and more chains. The big boys have come in and bought many small natural food manufacturers and today many of the old time natural food brands are either gone or owned by the big boys. These large companies use their great war chests to be able to offer free goods to get their new products (usually line extensions) into stores.
What does this do to the small start ups? It precludes them from many stores. They need to raise lots of money, so they take on investors who might not believe in anything but the bottom line. The quality has gone down. Creativity has taken a hit. The chains have decided to skim the cream off the top and private label the fastest moving items, thereby cutting into sales of brands that took decades to build.
Today, there is a great opportunity in the mass market. Chain stores are concerned that their consumers are going over to Whole Foods Market, or other more progressive chains, so they are taking on more and more natural and organic foods. This is great for the manufacturer who has a truly unique product.
However, if their products can easily be knocked off by someone else, or 365’d (Whole Foods private label brand), then they will be. If they are easily copied (such as peanut butter, cookies, jams, cup of soups, juices, etc) they won’t be able to make it in the mass market, since the mass markets have those items available under such brands as Full Circle, President’s Cholce or the store’s own private label brand.
NBN:What role do UNFI and WFM play in your business plan?
JP: They are essential parts of our plan, since we want to build a firm foundation in the natural food segment..
NBN: I frequently hear from vendors that increasingly both UNFI and WFM are vital yet increasingly greedy partners in growing sales.
JP: They are big, public companies, and have, out or necessity, discovered ways to maximize their profits. I wouldn’t want to have to start out today in this environment, not having at least some of the connections that Cedric Smith (the other partner in Paino) and I have built over the years, some going back to the days at Nasoya. One of the best things about these businesses is that some of the same people are there from the old days.
NBN: At what point, if any, are conventional outlets become part of your market strategy?
JP: Since conventional stores are selling more natural foods, (because people want to buy natural and organic foods at their local supermarket) we’ll be there with our products.
NBN:When did you first begin plans for the new company? How has the recession impacted these plans?
JP: We started to make the soy ricotta and selling it about 4 years ago. At that point I was just going to provide products to other companies, and let them market them, but as new products were developed, we decided to bring them out under our own brand. Our business plan is to develop a portfolio of brands under the Paino Organics umbrella. Our first product was Primacotta, soy ricotta, our second was NatureNaise, a healthy alternative to mayonnaise, and our most recent brand is Number 9 Salsas.
The recession has impacted small manufacturers and many small natural food stores alike, in that the stores are not bringing in as many new products during this period. Whereas before they might have taken a chance on a new item, the recession has caused them to think twice. Perhaps if free goods are offered they will take them in, but again, small manufacturers can’t always afford this. For us, we delayed the full introduction of our NatureNaise until recently at the Natural Products Expo in Boston. Essentially this was our company’s first real introduction into the marketplace..”
